Examining the Financial Condition of Sport Governing Bodies: The Effects of Revenue Diversification and Organizational Success Factors

Abstract

Sport governing bodies play a critical role in the sport system. The purpose of this study is to analyze their financial condition, a topic that has been largely neglected in previous research. Based on financial portfolio theory, it was suggested that the level of revenue diversification has a positive effect on their financial condition (measured through total revenues, break even, profit, and investments). Also, the influence of sport-related and financial success factors was examined using data from a nationwide online survey of sport governing bodies in Germany (n = 1,080). The results provided evidence of a relatively high level of revenue diversification compared with other industries. Revenue diversification, hosting major sporting events, and cost optimization had a positive effect on the financial condition, while increasing memberships in clubs and organizing competitions had a negative influence. The findings have implications for the management of sport governing bodies.